The Hercules City Council, without any discussion, awarded almost $1 million in service and consulting contracts for the current fiscal year to a firm founded by the Hercules city manager and now owned by two of his daughters.

The six contracts totaling $950,000 technically are amendments to existing contracts between the Hercules Redevelopment Agency and the provider, NEO Consulting Inc. doing business as Affordable Housing Solutions Group, aka Hercules Affordable Housing Department. Founder Nelson E. Oliva relinquished his financial interest in the company about 2-1/2 months before he became city manager in April 2007, City Attorney Mick Cabral has said.

NEO/AHSG has come under public scrutiny of late for facilitating six-figure mortgage loans by the Redevelopment Agency to some city employees, and for the close familial relationship of the firm’s principals to the city manager.

The council unanimously approved the package of contracts for fiscal 2009-2010 on June 23 as part of a broad Consent Calendar item covering $3,460,277 worth of “amendments to existing annual professional services and maintenance agreements” in a variety of categories. Later at the June 23 meeting, sitting as the Redevelopment Agency board, the council approved the package once more, again without discussing it.

“As a part of the annual budget adoption, funding is included to provide for … services required by the various responsible departments,” reads the staff report accompanying the resolution. “This funding includes consulting services, contract maintenance services, reproduction and video broadcasting services.”

The affordable housing contract amendments among the list of renewals for 2009-2010 include:

$50,000 for administering a Business Development Loan Program;

$60,000 for administering the Redevelopment Agency’s loan portfolio and a compliance program;

$150,000 for administering a Community Beautification Program;

$120,000 for “general administration support;”

$430,000 for running the Hercules Affordable Housing Program; and

$140,000 for Sycamore Main Street North, since renamed Sycamore North Downtown, a mixed-use project that broke ground in May and that is supposed to contain 74 affordable housing units in its latest concept.

The Finance Subcommittee, consisting of Mayor Joe Eddy McDonald and Councilman Kris Valstad, had considered the item the previous week and forwarded it to the full council for approval, Valstad announced before the vote to approve the consent calendar.

A similar, sweeping resolution for fiscal 2008-2009 totaling $2,769,192, including two affordable housing contracts worth a combined $680,000, similarly breezed through the council without discussion June 24, 2008; a month later, the council approved two more 2008-2009 contracts with NEO/AHSG totaling $270,000 that appeared individually on the Consent Calendar.

NEO/AHSG signed its original affordable housing consulting contract with the city in late 2003. As of a Hercules financial report for fiscal 2007-2008, two adult daughters of Oliva each owned half of the company’s shares.

Reach Tom Lochner at 510-262-2760.

more information
Review a list of 2009-2010 annual contract renewals at www.ci.hercules.ca.us/documents/Agendas/Council/2009/06-23-09/Item%20IX.1%20Annual%20Contracts%20Atch%202.pdf